So you’ve got an idea for a business, something you can run to bring in some extra cash while you’re studying, but you need some money to get you started. What do you do?

Ask the bank?

Even without the current economic climate, a young person, perhaps with student debt and no previous business experience is unlikely to come out of that conversation with a cheque book, a loan and an overdraft facility.

The bank of mum and dad is usually open for business, but what if you need a couple of thousand pounds, rather than just a couple of hundred?

There is another option.

Crowdfunding.

Crowdfunding is an alternative source of funding. It’s a global phenomenon that has changed the way start-ups, student enterprises, social and community projects raise money. It’s simply tapping into the online crowd – your network of friends and family, and their network and beyond – to ask for donations of cash in return for rewards.

Crowdfunding has developed rapidly over the past few years, driven by the maturing social media ecosystem, including Facebook (500 million active users), Twitter (more than 175 million active users) and LinkedIn (more than 100 million registered users spanning more than 200 countries and territories worldwide).

It is remarkably simple but incredibly effective, it is micro patronage, or grassroots funding; tens, 100s or 1,000s of people donate £10, £15, £50, £100 or more to ventures in return for treats, gifts, even a simple, public ‘thank you’.

Companies like Kickstarter and Indiegogo, both in America, have raised millions of dollars for start-up businesses, and there has been a number of successful high profile examples; you might remember that Barack Obama crowdfunded his election campaign, and a group of young entrepreneurs in America raised just shy of $1m to prototype and manufacture the TikTok watch strap, designed for the iPod Nano. You can now find this product in Apple stores worldwide.

As inspirational as massive success stories like this can be, crowdfunding works just as well – and often better - for smaller ventures, for ordinary people with a good idea, and particularly for young people and students.

Bloom VC (the VC stands for Venture Catalyst), is the newest crowdfunding platform to launch. Based in Scotland, Bloom allows someone with an idea to post a project from anywhere in the world and receive donations from anywhere in the world.

Under the Bloom model individuals or startups create an online elevator pitch for their idea, detailing what it is, why it’s important, how much money is needed and for what. Using video and images to create a compelling story and offering exciting and attractive treats in return for donations, the pitch is then

uploaded onto the Bloom site where the project idea owners share it with their social networks, both online using Twitter, Facebook and LinkedIn and offline amongst friends, family, neighbours and colleagues.

Each project has up to 60 days in which to raise the funds. If they fail, they don’t receive a penny, but if they succeed or even raise more than requested they get the whole lot.

The promises of money are not charitable donations, nor are they investments or loans. The project owner or young entrepreneur is not expected to give up equity in their fledgling business nor pay anything back, instead they maintain complete control over their work or business.

Even if you don’t have an idea for business, you can use crowdfunding to support a community project or social enterprise in your area.

Consider the impact of what you’re doing as a unique feature on your CV. You can demonstrate commitment to your community, a willingness to change things for the better, a practical approach to problems, a determination to see something through from start to finish, an interest in more than your Xbox.

The experience will stand you in good stead for the future, you’ll learn to manage a project, possibly lead a team, communication and problem solving skills. Ultimately, you’ll make a difference to your community.

So what are you waiting for? What could you do?

www.bloomvc.com

Michelle Rodger is the Chief Communications Offer at BloomVC. BloomVC is the first crowdfunding venture of its kind in the world, helping you raise money to realize your dream of starting your own business or community venture. 

I’ve recently read a business plan that has prompted me to write another piece on the topic.  The first thing that should be done when starting a new business is creating the plan, or the blueprint for the organization.  For many reasons the business plan is a critical component to the businesses successes and failures and helps reiterate and reinforce the focal points of the company when times are hard.  Studies show the first twelve months can make or break a business and can be stressful times.  Your business plan can be your backbone and rock during these hard times.  Therefore, you need to put the effort into creating the business plan, sticking to it, or adjusting accordingly as you develop, grow, and continue forging ahead.  In addition to being your own support your business plan can help secure financial help with start-up costs, short-term loans, and tracking your goals.

There are nine key sections to the business plan: Executive Summary, Market Analysis, Company Description, Organization & Management, Marketing & Sales Management, Service or Product Lines, Funding Requests, Financials, and an Appendix.

The Executive Summary is the most important section and should provide a short synopsis of the entire plan as well as some history of your company.  I recommend completing the entire plan before writing this section.  This section should answer questions such as:

• ·         What kind of company do you have?
• ·         Who are your primary customers?
• ·         What are your short and long-term goals?
• ·         How many employees do you anticipate having? What key metric will drive this anticipatory rate?
• ·         Who are the leaders of the organization? What experience do they have and how will that experience be leveraged in this enterprise?
• ·         If you are seeking funding, how much are you looking for?

Following the Executive Summary should be a Market Analysis.  It is imperative you understand who your competition is and know everything there is to know about the market you are entering.  If you are creating a new market or are in a new market, relate the similarities to another industry’s beginnings.  Remember to be realistic as the only person you will be fooling is yourself.  Knowing who your customers are and how your competition acts will be a key component in advertising and marketing your product.

The Company Description & Organization & Management sections should speak for themselves.  Discuss what type of company you are, LLC, S-Corp, C-Corp, LTD, LLP, etc… What is the company about, the mission statement, goals, and the purpose the company ultimately serves.  Then discuss the Organization & Management, how these individuals were selected for the position they are in, and the experience they have to excel in this position.  The Organization & Management section can be a critical section for investors because well respected leaders and managers can make all the difference during key growth stages.

The Marketing strategy should elaborate on four key points: market penetration, growth, channels of distribution, and communications.  There is no right or wrong answer to your strategy in this section.  Marketing is always evolving and changing and so are your customer’s demands.  This makes marketing an extremely challenging fixture for any business.  However, this section will help you and the investors understand your outlook on marketing and make your strategy relevant to your business.  In addition to the four key points mentioned above this section should discuss sales force and sales activities.

The bread and butter of your business plan is the Service or Product Line(s) section.  This tells the investors the benefit of what you are selling.  Be sure to focus on the benefit of your product to consumers and not necessarily all of your actual products.  If you are a hosting company, or aspiring company, and offer Shared, Reseller, VPS, Dedicated, and Co-location, you do not need to break down each specific product and what they are.  You should talk about the added benefit and services each of these products will feature.  The market summary should help the readers understand more about the actual products you’re offering and the basics behind your products and/or services.  In addition to touching on the added features or services describe the products or services from a consumer point of view, what stage of development that product or service is in, and the benefits of your product or service and the ability to meet consumer needs.  It is also beneficial to list what separates you from the competition in this section.

The Financials & Funding Request section should be relevant, within scope, and not be an extreme.  The previous sections laid out who your company is and where you want it to be.  This section should discuss the financial implications of getting there.  It is important to discuss what your current funding requirements are, future requirements over the next five years, how these funds will be used, and any long-term strategies you plan to implement that would have a significant impact on funding or cash flow.  Always discuss time frames and what the funds will be used for.  Once you have listed your requirements and requests be sure to include the justification for it.

The second portion to the Financials & Funding Request section should include prior Financial statements such as three to five years’ worth if you have them.  It is imperative that your Financials match your funding request or else you will immediately project inconsistencies in your plan.  Remember investors are used to looking at charts, graphs, and pivot tables, don’t forget to be creative and capture the attention of the reader.

Lastly, finish up the business plan with your Appendix.  This section is not included with the submission of your business plan and usually is requested by investors.  This section shares credit history of your business, resume of key executives and employees, pictures of your products or recommendations of your services, letters of reference, details of your market studies and their sources, relevant articles or references to your business plan, software or any other license, permits, or patents, copies of leases, building permits, contracts, list of business consultants, including attorney and accountants.

Be sure to remember who and where you sent your business plan and appendix.  This is the key to your successes and failures.

For further analysis of the Business Plan please see my September 2011 blog entries on YIPFolio.com.  For any questions or inquiries please send an email to Doug.

Doug C. is a Financial Analyst for a top 20 Fortune 500 Financial Services company and owner of YIPFolio Financial & Management Consulting Services. He specializes in Financial & Accounting services including balance sheet, P&L, fixed assets, and capital funding. He has spent several years in the Hosting and Technology industry while consulting management and senior management on all aspects from raising capital to managing daily cash flow. Doug received his BS in Finance from Fairfield University and resides in the Greater New York City area.

Immediately from the start VPS.NET has been a company that has embraced social media. For fun, for marketing, and to stay connected with our customers; it's something that we enjoy and feel comfortable with. As we've grown, adding many new staff members to our social media team, we've needed to take advantage of outside tools to help us work together as a team and CoTweet, by Exact Target, was a great tool that we loved and used gleefully. Unfortunately, Exact Target recently announced that CoTweet, the free edition, would be shut down February 15th. Immediately we looked at their enterprise option, now known as Social Engage. While Social Engage was a great product, and one we would've certainly embraced, its price tag, was not. We found ourselves saddened at the thought of our easy social media fun being a thing of the past, but alas, we found other options.

We had a few important requirements that ruled out many competitors like HootSuite and TweetDeck. They work really well for smaller teams, and even larger ones in certain situations, but for us they just wouldn't work. The thing we loved about CoTweet was the inbox and outbox; we could see all messages directed to us, and about us, allowing us to easily engage our audience. This also allowed us to assign certain team members to handle specific conversations, and topics, which they were well versed in. Another requirement of ours, was that we wanted to avoid using a desktop application, which signed directly into Twitter. There's issues with accountability (i.e. who said what?), but also, many of us telecommute and use multiple different devices to stay in touch with social media, so we really wanted a hosted application in order to avoid multiple installations.

That's when Sprout Social popped up on our radar, and I think I can safely say, we've been in love ever since. With an elegant, easy to use dashboard, that not only allows us to easily stay in touch with our followers, but also learn about them, and their interests, Sprout Social is the perfect application for us. Further, it even gave us the ability to take advantage of some unique tools, like Facebook and bit.ly integration, that we previously weren't used to.

While Sprout Social isn't a free application, it does have a 30 day free trial, and monthly plans start at $9 a month, something we'd glad to pay as it makes our lives tremendously easier. If you're struggling with social media collaboration tools, Sprout Social gets a thumbs up from us!